Fuel security concerns endanger Australia’s defensive capabilities

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As a prosperous middle power, Australia has a small and professional defence force. It’s equipped with advanced combat aircraft, ageing but effective submarines, capable warships and, ultimately, nuclear submarines.

Other than the nukes – still more than a decade away – all assets require fossil fuels. As the world transitions to renewables, these will be in increasingly short supply.

This isn’t an issue for the distant future. As Australian Strategic Policy Institute analysts Ulas Yildirim and William Leben noted in a study in June, Australia’s dependence on imports for fuel security places the Australian Defence Force at risk. “The risk isn’t whether the ADF can get to an area of operations and perform poorly but whether it can get there at all,” they write.

Neither is the issue of national fuel security just a matter for the ADF. As of May, Australia had just 64 days of oil stocks, according to the International Energy Agency (IEA).

Australia depends entirely on commercial suppliers. Not for over a decade have we met the IEA’s mandated stocks, equivalent to at least 90 days of net oil imports. Global fuel uncertainty, prompted by the conflict in Ukraine, is being felt with higher prices at the pumps.    

Ninety per cent of Australia’s fuel is imported, either as refined product or crude that is refined locally. It arrives on tankers transiting potential hotspots such as the South China Sea.

Not long ago, Australia boasted seven refineries, then four and now two – Ampol in Brisbane and Viva Energy in Geelong. Both are heavily subsidised, with options for support to continue to 2030.

According to the IEA, about three days of Australia’s reserves are held offshore in the US Strategic Reserve, acquired when global prices were low. The problem is we have no Australian-flagged tankers.

“It’s not much bloody use if you have no control over the shipping to bring it here when you need it, and in the future we’ll probably have no refineries,” says John Blackburn, former deputy RAAF chief and now a consultant on national security and resilience.

He hopes some good may come from the Defence Strategic Review commissioned by the Labor government in August for delivery by March.

Blackburn says Defence believes it would get priority during any fuel crisis. “If the civil infrastructure doesn’t have fuel, they aren’t going to be able to deliver the supplies to you whatever you need,” he says. “Contractors can’t get to work; society around you stops.”

He cites the example of RAAF Tindal in the Northern Territory. Fuel to fly the RAAF’s advanced F-35A aircraft arrives by tanker (from Singapore) at the port of Darwin (operated by a Chinese-owned company) and is then transported 300 kilometres by road to Tindal.

On the plus side, Defence’s fuel storage capabilities are increasing. Works at Tindal will add 6 million litres. A new tank farm at Darwin will hold 300 million litres to support US military training.

More worryingly, Blackburn says Australia has a growing dependence on China, which is the fourth largest importer of certain refined fuels such as jet fuel. He says there’s an increasing risk of US-China conflict and Australia would likely be involved.

“It would seem to be sensible here that we would avoid becoming increasingly energy dependent on that country,” he says. “We’ve just seen what’s happened with Russia and Ukraine. Unless you look at national resilience coherently, any thought that we can have a resilient defence force is basically marketing.”

What’s to be done? Non-fossil fuel alternatives are emerging but aren’t yet available in commercially viable quantities. ASPI senior analyst Marcus Hellyer says the ADF may need to own more of the supply chain, from well or synthetic fuel plant to bowser, increasing logistics costs and challenges.

PGMs, small-arms ammo and warships

Besides fuel security, Australia has made substantial progress in creating sovereign defence capability, though there’s some way to go in important areas.

The Ukraine conflict has demonstrated how the modern battlefield is dominated by precision-guided munitions (PGMs) and how quickly they can be expended.

The ADF relies on a diverse range of PGMs to equip combat aircraft and warships, most sourced from the US. The ADF possesses substantial but unspecified PGM war stocks, which it has sought to expand but which would likely be used up early in a major conflict.

Recognising the problem, the former government announced a plan in March 2021 to create a sovereign-guided weapons manufacturing capability. Local branches of US primes Lockheed Martin and Raytheon oversee a pair of industry consortia.

No locally made missile is yet in sight, which may be a consequence of US hesitance to licence foreign production of its most advanced technology. Likely closest is a separate plan for local production of the Israeli Spike anti-tank guided missile, which will equip infantry and new armoured vehicles.

Australia is acquiring the US HIMARS surface-to-surface missile system, a standout performer in Ukraine, as well as long-range air-launched rockets.

For any nation, a fundamental sovereign defence capability is to manufacture small-arms ammunition so an army can continue to fight. Australia has plants operated by Thales in NSW and Victoria. A new plant in Queensland operated by NIOA produces 155mm artillery projectiles.

Australia is also making warships. The first of 12 Offshore Patrol Vessels, substantially more capable than their predecessors, was launched in Adelaide in December 2021. Work on the first new Hunter-class frigates, to replace the ageing Anzac-class frigates, is underway. 

Once derided as “floating targets” for their marginal sensors and paucity of weapons, the Navy’s Anzacs are now equipped with an advanced radar made by Canberra-based CEA Technologies. This is as good as any in the world and, according to one former senior defence official, substantially cheaper. Hunters will be similarly equipped.

Defence has somewhat belatedly acknowledged its reliance on space services, such as communications and surveillance, and has launched a series of projects to create sovereign capabilities. This technology will mostly originate overseas but will be our own once in service. 

Australia is also close to a satellite launch capability, opening the way for the launch of civil and military payloads.

Photo: Defence